Which of the following is classified as client funds?

The classification of client funds refers specifically to money that belongs to a client and is held by a broker or agent in a fiduciary capacity. Earnest money is the correct answer because it represents a deposit made by a buyer to demonstrate their serious intent to purchase a property. This money is typically held in a trust account until the transaction is completed or terminated, making it a clear example of client funds.

Client funds need to be handled with a high level of integrity and care because they are not owned by the broker but rather are held on behalf of clients. On the other hand, application fees, commission fees, and administrative fees are not classified as client funds because they do not represent money that is held for a client’s benefit; they are fees charged by the broker or agent for services rendered and are typically considered income for the brokerage. In summary, earnest money stands out as the type of fund that directly belongs to a client and is held during a specific real estate transaction.